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The key turning point of the photovoltaic industry will be how to "break the butterfly"?
The photovoltaic industry has made remarkable progress in the renewable energy sector, driven by supportive government policies and continuous technological innovation. Over the past few years, the industry has seen significant growth, with the newly added solar capacity surpassing wind power for two consecutive years. As the market matures, new challenges are emerging, pushing the industry to adapt and evolve.
In recent years, the implementation of large-scale photovoltaic projects has accelerated technological upgrades across the industry. The National Energy Administration introduced the "Leader of Photovoltaic Power Generation" plan in 2017, aiming to promote technological advancement, industrial upgrading, and cost reduction through market applications. This initiative has helped drive innovation and improve efficiency in the sector.
China's photovoltaic industry is now at a critical turning point, shifting toward high-efficiency and high-quality development. Future efforts will focus on accelerating the commercialization of technological innovations, eliminating outdated technologies, and achieving the goal of affordable solar electricity by 2020. According to data from the China Photovoltaic Industry Association, from January to September 2017, the newly installed capacity reached about 42 GW, a nearly 60% increase compared to the same period in 2016. Distributed installations alone reached 15 GW, showing a more than 300% year-on-year growth. This rapid expansion has played a key role in promoting China’s transition to a greener and lower-carbon energy system.
However, the industry still faces numerous challenges. Issues such as curtailment of solar energy, delayed subsidies, and difficulties in financing have become major obstacles. In the northwest region, where solar resources are abundant, the curtailment rate remains high due to low local demand and limited transmission capacity. In 2016, the northwestern region wasted over 7 billion kWh of solar power, with Xinjiang and Gansu reaching curtailment rates above 29%. Meanwhile, the eastern regions, with rising energy demand, are seeing a surge in distributed and rooftop solar projects. This regional imbalance is influencing the strategies of companies and shaping the future direction of the industry.
Additionally, the high costs of land, grid connection, labor, and financing continue to burden the industry. Although technological advancements have reduced electricity generation costs, they are not enough to offset these non-technical expenses. Currently, government subsidies remain a crucial source of funding. However, long-term sustainability requires greater innovation and stronger R&D efforts. Technology is the core driver of growth, and innovation is essential for building a modern, competitive economy.
Financing remains a challenge, especially for smaller distributed projects. The high capital requirements and long return periods make it difficult for many companies to secure funding. To address this, industry consolidation and the elimination of inefficient production capacity are necessary. Increasing market concentration and cultivating leading enterprises with strong competitiveness will be vital for future success.
Looking ahead, the photovoltaic industry is expected to expand into multiple dimensions, integrating with sectors like agriculture, poverty alleviation, and environmental protection. Cross-industry collaboration will enhance the scalability and impact of solar energy. Moreover, the industry is expanding along the entire supply chain, with growing downstream demand driving upstream production. This vertical integration will support the sustainable development of China’s solar sector.
With the rise of the “Internet Plus†era, innovations in high-efficiency photovoltaic equipment, smart micro-grids, and precise manufacturing will shape the future of the industry. Technological advancements, combined with better energy storage solutions and improved grid infrastructure, are expected to reduce curtailment rates and boost profitability. As a result, reliance on government subsidies may decrease over time.
According to forecasts from the European JRC, renewable energy could account for over 30% of the global energy mix by 2030, with solar power contributing more than 10% of total electricity. The strategic importance of the photovoltaic industry is growing, positioning it as a key pillar of the energy transition. The future looks promising, and the industry is well on its way to becoming a major force in the global energy landscape.